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The U.S. has led the world in technology for a long time, and while it’s still the definitive leader in the artificial intelligence space, China has stepped onto this stage determined to overtake its American rival. Whoever manages to dominate this ultimate technological end game will, in the words of Vladimir Putin, rule the world.

For now, China lags in every area of AI development, including hardware for autonomous AI, or robots, and self-driving cars. It also lacks experienced AI researchers and is behind in terms of fundamental innovation in algorithms.

According to a report by Oxford’s Future of Humanity Institute, China scores 17 in its overall capacity for developing technologies, compared to a score of 33 for the U.S.

But there is at least one critical advantage China has in this race…

While it comes up lacking on a number of AI levels, one important shortfall is actually a formidable strength: China lacks serious laws governing data protection.

This gives China what amounts to total freedom to develop AI technology and give it the space to become huge, according to Dong Tao, vice chairman for Great China at Credit Suisse Private Banking Asia Pacific.

China is winning the big data war, even if it’s not the AI leader – yet…

The past decade has been one of enormous growth for Chinese tech darlings. Look no further than tech giants such as Tencent, whose market capitalization jumped from around $13 billion in 2007 to over $500 billion in 2018.

“America is at a disadvantage because we are No. 1, because of complacency that goes with that,” says Chris Nicholson, CEO of Skymind – a Tencent investment. “The U.S. is still No. 1 in research but China is catching up quick. They believe it’s their race to win. And I think it’s our race to lose.”

Of the one million foreign nationals enrolled at U.S. schools, about one-third are from China, which is double the number of any other country. Chinese students are awarded 10% of all doctorates in the U.S.–and most of them are in science and engineering.

In many ways, the U.S. advantage right now is bolstered by Chinese minds. There are more Chinese engineers working on AI at U.S. tech companies than in all of China. That’s why Trump’s administration is now considering restrictions on the number of Chinese citizens enrolled at U.S. colleges and universities—but will that harm America’s AI advantage?

China also rules the world in terms of internet users, 750 million out of 1.4 billion people online.

And while harnessing data is no challenge for China, data alone won’t win it the AI arms race.

China knows this, and that’s why the Chinese State Council has set itself the goal of matching the U.S. in AI by 2020, eyeing a $150-billion industry. By 2030, it plans to become the key AI “innovation center” for the world.

China’s tech leaders are confident they will come out on top, too. While they recognize that China is behind, they believe that not only will they catch up, but that China’s big data prowess will ensure them the top position. Size matters.

“China has the most internet users. And the Chinese government’s determination to push the application of AI forward is unmatched …” China’s SCMP media quoted Liu Qingfeng, chairman of iFlyTek, as saying.

And Chinese billionaires are betting big on AI. Chinese tech magnate Robin Li is hoping to play a game-changing role in what he’s sure will be Beijing’s dominance in this sector.

The force behind the “Chinese Google”, Baidu, committed $2 billion to AI-related research and development last year, and this year expects to boost that significantly.

For China, AI is a national priority – and its billionaires are definitively on board. It’s a unity of purpose that the West will find hard to compete with.